At the heart of the transition lay an informal pact that bound the black and white communities together. Political power would be transferred to blacks but property rights would enable whites with wealth to retain it. While white big business would assist black business people in acquiring stock in their corporations, whites with advanced skills would be assured of jobs in an economy aiming for high growth and more efficiency. The task of selling the economic side of the pact to the victorious ANC fell on the shoulders of Thabo Mbeki. It was a huge task. Many ANC and Cosatu leaders had embraced the doctrines of socialism and expected wholesale state intervention to assist the poor, rapidly narrow the gap between white and black, and provide a better life for all.
The two decades from 1973 to 1994 had seen a dramatic decline in economic growth. There was a staggering drop in fixed investment, rising unemployment and high levels of poverty and inequality, with blacks the worst affected. Moreover, physical and social infrastructure – housing, health, education, sanitation, water, electricity – for the majority black population was hopelessly inadequate following decades of neglect. The budget deficit in the last year of the National Party government ballooned to 10.8% of GDP; the total national debt to GDP ratio stood at 52.5%; inflation at 8%.